Domain investing is similar to investing in real estate; you have a property to market and eventually someone is going to be willing to pay you for it. Like real estate, the profits of domain investing can be substantial or you can lose your shirt buying worthless domains.

The most valuable domains are those using only one word. One-word domain names are simple for potential traffic to remember and also attract web surfers via direct type-ins. The value of one-word domains increases daily and those that invested in them in the past now own some very sound investments.

Of course, the shorter the domain name, the easier it is to resell it. Unfortunately, even though there are over 50,000 possible combination of 3-character domain names, every one of them have been taken! A three-character domain name can command a price of four figures. Four and five character domain names are also good investments for much the same reasons. However, just because you have a 4 to 5 character domain name does not mean you can sell it. “hats.com” would command a hefty price but you probably couldn’t even give away a domain such as “e4hz.com”. It’s an interesting fact that the most popular domain name length is eleven characters.

The value of a domain also rests in its appeal to many buyers. For example, “wormfarms.com” would fetch a much lower price than a domain with the name of “money.com”. Nearly everyone is interested in money but there are very few worm farmers.

Penny domains are those web addresses that you can buy for as little as twenty dollars and can be very good investments. A domain may be for sale at such a bargain because of reduced traffic, in which case you will need to invest some time and effort into promoting it. Very few people want a domain with no traffic. Once you re-establish the domain, you can sell it for a profit. Good domains with decent traffic are hard to find and therefore get snapped up quickly when they’re offered for sale. By developing and marketing your domain, you increase its value and your profits.

If buying and selling existing domains doesn’t seem much of a challenge, you can always invent and register your own domains. An increasingly common practice is to domain hack, or “hack” up an existing domain name as so many of the “good” names are already registered. Buddyboy.com, when hacked, would change to bud.dyboy.com. The advantages of this practice include receiving some of the original site’s traffic should someone looking for that site type the name incorrectly.

You may also want to consider grabbing expired domain names. Every day there are domains whose registration runs out and is not renewed. By finding and registering these, you not only have an established domain but also its traffic. These expired domains can be a real goldmine for a domain investor. You can hire a domain watchdog service for a low monthly fee and snatch up the most marketable domains as their registration expires.

Successful domain investing also involves market research. If vintage cars are the next big thing and you can see the trend developing, you would invest in vintage car domains instead of collectible figurine domains. By following market trends and popular culture, you can have sellable domains that move quickly instead of being stagnant.

Whatever strategy you use, selling domains will continue to be profitable for years to come.

About the author of this article:

Imyoo.com provides short & brandable 3,4 and 5 character domain names like GIUU.COM, ZEYY.COM, OXXU.COM, XOYY.COM, IIXY.COM, IWUU.COM or OSYY.COM.